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The Ongoing Saga of NC Sweepstakes Cafes

A jury in North Carolina in February 2015 found in favor of an internet cafe sweepstakes business in Burlington stating it isn't in violation of state gambling or lottery laws. This is a hotly contested topic and not the last legal battle these types of businesses face. These cafes offer players a chance to win when they purchase services or products, usually internet time.

The battle started in 2013 when a letter was sent by law enforcement to all sweepstakes businesses in Burlington stating they would face legal action if they didn't close as they were in violation of North Carolina's sweepstakes ban.

The contention by law enforcement was that their business model of pre-reveal sweepstakes software utilized by the cafes was in violation of state laws. The businesses instituted the software to try to comply with North Carolina law after a ban was placed in 2010 that made it “illegal to conduct or promote sweepstakes through the use of an entertaining display.” Apparently, instead of the previous sweepstakes machines that were basically internet-based, point-click-and see if you win types of sweeps, the software allows players to see what the prize amounts are before they play.

Opponents say this is just one way to get around gambling laws and that these types of businesses prey on the poor and gambling addicts. Supporters say this is hypocritical since there is a state lottery and that the state shouldn't dictate to people how to spend their money. They also argue that shutting down the cafes could cost many jobs across the state.

Other sweepstakes parlors have recently closed their doors, they hope temporarily, as law enforcement informed them they weren't in compliance with state law. Presumably, changing to pre-reveal software may help them, but again, this issue is a controversial one. A new bill is expected to be introduced to the NC House that will clarify regulation and taxation of these businesses.